What Is Happening With Dish’s Bid For LightSquared?

by Trefis Team
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Earlier in May, Dish Network (NASDAQ:DISH) made a $2 billion bid to acquire LightSquared Inc., which is currently navigating its bankruptcy proceedings. [1] Dish has been aggressively eying spectrum for some time and has spent around $4 billion in such acquisitions. While the pay-TV market is saturated in the U.S., Dish sees growth in the wireless industry.

Earlier the company has made a bid to acquire wireless carrier Sprint (NYSE:S), which could have potentially brought Dish’s portfolio of spectrum to use but after the raised bid of Japanese telco Softbank, Dish withdrew its offer. [2] In another attempt, Dish placed a bid for Clearwire and had to withdraw its offer after the raised bid by Sprint. [3] While the LightSquare bid is still open, it has been learned that the company is not acting on Dish’s offer.

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Dish’s Interest In LightSquared

Dish and LightSquared held similar vision of an LTE network. LightSquared with its ambitious LTE plans was able to interest investors earlier, but the company soon met with roadblocks such as the U.S. Federal Communications Commission (FCC) move to bar LightSquared’s planned national broadband network led the company to file for bankruptcy. [4] The issue with LightSquared’s airwaves is that they are similar to the ones used by Global Positioning System (GPS) navigation systems and can cause interference. However, earlier in May, FCC chief said that he expects LightSquared to eventually win approval for using its airwaves, as they are too valuable to be left unused. [5] For Dish, LightSquared’s spectrum would be of specific benefit given that it’s licensed for Mobile Satellite Service (MSS). Dish amassed its MSS spectrum through the acquisitions of DBSD and TerreStar for $2.7 billion in 2011. [6] While Clearwire is the biggest holder of currently licensed and deployed spectrum, LightSquared is the largest holder of not-yet-deployed MSS.

No Action Being Taken

A group of bankrupt lenders of LightSquared stated that the company has not acted on Dish’s offer made through an entity called L-Band Acquisition Corp. (LBAC). The debtors of the company have not met, negotiated terms, made a counter-offer or otherwise engaged with LBAC in over five weeks since the offer was made. The lender group seeks emergency court permission to enforce the terms of a court order that gives LightSquared exclusive rights to file its own plan of reorganization. [7]

Dish has been keen to enter the wireless space and has made some aggressive and bold moves with its unsuccessful bids for Clearwire and Sprint. Dish’s options of pursuing its wireless ambitions have narrowed in the past few weeks. While T-Mobile US can be a potential target for Dish, it will be interesting to see how the LightSquared story unfolds. [3]

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Notes:
  1. Dish Eyes More Spectrum With LightSquared Bid, Trefis, May 23, 2013 []
  2. Dish Folds Its Hand On Sprint But Ups The Ante For Clearwire, Trefis, Jun 19, 2013 []
  3. Dish Walks Away From Clearwire: Is T-Mobile U.S. Its Next Target?, Trefis, Jun 27, 2013 [] []
  4. LightSquared Implements Voluntary Chapter 11 Restructuring, LightSquared Inc. Press Release, May 14, 2012 []
  5. FCC Chief Sees LightSquared Getting Cleared for Airwaves, Bloomberg, May 8, 2013 []
  6. Dish’s SEC Filings []
  7. LightSquared Not Acting on $2 Billion Offer, Lenders Say, Bloomberg, Jun 19, 2013 []
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